Kenya Commercial Bank , east Africa's biggest bank by assets, plans to improve returns for shareholders by stepping up lending to fast-growing small and medium sized businesses, its chief executive said on Wednesday.

Joshua Oigara told the Reuters Africa Investment Summit that the bank, which lags the returns of some rivals like Equity Bank , aimed to lift its return on assets to 4.5-5.0 percent this year from 3.6 percent in 2012, and higher the year after.

To do this, it will invest in technology platforms and increase its share of high-margin business lines, such as those targeting small and medium-sized firms (SMEs).

Currently, around 40 percent of Kenya Commercial Bank's (KCB) lending business is focused on major companies, 30 percent on personal loans and 15 percent on mortgages, with the remainder going to SMEs.

"What we would like to enhance is our SME and micro-SME sector from 6 percent to 10-15 percent in the mid-term. That is how we see ourselves unlocking the potential," Oigara said on Wednesday.

Oigara said KCB's loan portfolio of 200 billion shillings ($2.4 billion) last year would expand by close to 20 percent this year, driven by energy, retail and real estate lending.

Apart from Kenya, accounting for 90 percent of earnings, KCB operates in Uganda, Tanzania, South Sudan, Rwanda and Burundi. Their contribution to pretax profit is expected to climb to 13-15 percent this year from 8 percent in 2012, Oigara said.

He said there was room for KCB to expand in its international markets. In South Sudan, a country of about 8-9 million people, the bank has fewer than 300,000 customers, but plans to add five branches to its network of 20, he said

"Next year we want to go into more markets," Oigara added. "Democratic Republic of Congo remains a key focus for the group. We are keen on Ethiopia. We are keen on Somalia and also the southern Africa area."

Kenya could also get an economic boost following a peaceful election after violence marred the last one five years ago, he said, adding the main risks to the economy were external, such as higher oil prices that would hurt the country as an importer.

Surging oil prices in 2011 sent inflation soaring, forcing a sharp rise in lending rates, which in turn pushed up bad loans. Oigara said KCB aimed to cut non-performing loans to 5.5 percent of the portfolio from 6.1 percent in 2012.

Despite such challenges, Oigara said east Africa remained buoyant and pointed to the bank's Burundi business which turned a profit in 2012 after launching in May that year.

"Africa is no longer the continent which was dark where you couldn't get guidelines, regulations to support your business," he said. "We are much more open today."